(Adds analyst comment and dateline, updates prices)

By Eric Onstad

LONDON, May 28 (Reuters) - Copper edged higher on

Thursday following news offresh efforts by top metals consumer

China to boost its economy, but investors were wary after an

escalation in the Middle East conflict.

Three-month copper on the London Metal Exchange

added 0.4% to $13,582 a metric ton by 0930 GMT after slipping to

its lowest level since May 21 at $13,464.

Sources told Reuters that China's central bank has

instructed banks to boost lending this month, underscoring

Beijing's continued efforts to support an economy squeezed by

higher energy costs and stubbornly weak domestic demand.

Oil prices rose and stocks retreated after a fresh U.S.

military strike on Iran dented investor confidence that the two

sides will be able to hammer out a peace deal.

"Copper is under pressure alongside the broader base metals

complex, as geopolitical uncertainty dents macro sentiment,"

said Ewa Manthey, commodities strategist at ING.

Investors are seeking to balance the potential of weaker

metals demand as the conflict cuts economic growth against the

prospect of copper shortages due to the lack of sulphuric acid.

U.S. Comex copper futures dipped 0.1% to $6.37 a lb,

bringing the premium of Comex over LME copper to 3.2% or $444 a

ton.

Traders have been steadily shipping copper to the U.S. ahead

of a decision expected at the end of June about whether to

impose tariffs on refined copper.

"Tariff expectations are once again pulling metal into the

U.S., tightening availability elsewhere and adding another layer

of distortion to the market," Manthey said.

The U.S. dollar index climbed to a one-week high,

making greenback-priced commodities more expensive for buyers

using other currencies.

LME lead fell 0.6% to $1,994 a ton after LME

inventory data on Thursday showed inflows of nearly 30,000 tons

of metal into warehouses in Taiwan.

LME aluminium shed 0.4% to $3,623 a ton and nickel

dipped 0.1% to $18,920 while zinc added 0.1% to

$3,515 and tin rose 0.6% to $54,720.